A contract is a document which contains terms and conditions which the parties intend to abide by. A contract can only be made when some prime elements are complying with. (Advice, 2012)
Two of the most important elements to initiate any contract are offer and acceptance.
An offer is the intention of the offeror communicated to the offeree with an expectant of approval of the terms (Woo Kah Wai v Chew Ai Hua Sandra , 2014). When the offeree approves of the terms of the offer then it is an acceptance in law (Midlink Development Pte Ltd v The Stansfield Group Pte Ltd, 2004).
Both offer and acceptance makes a binding contract
Both offer and offeree must be major and must not be of unsound mind
This is one of the most important elements in any contract formation the legal intention requirement submits that both the offeror and the offeree must have legal intent to abide by the terms of the contract. Thus, if any dispute will arise they are willing to move to the court of law.
In (T2 Networks Pte Ltd v Nasioncom Sdn Bhd, 2008)the basic presumption that lies with respect to legal intention is that the parties who are in family, social, domestic, friendly relationship never was to make their contract legally binding and thus there is absence of legal intention. Also, it is a basic presumption when the parties are in commercial relationship is that they parties wants to make the contract legally enforceable and thus there is presence of legal intention.
But, these general presumptions are rebuttable. The parties even though are friendly relationship wants to execute a legally binding contract then the contract is enforceable. Likewise, the parties are in commercial relationship but does not want their contract to be legally binding then there is no legal intention to make a contract enforceable in law. (Goh, 2014)
Consideration is a very important element in contract formation. Consideration is nothing but something of value that makes the promises amid the offeror and offeree enforceable. It is a gain or benefit that moves from the promisor to the promisee against the primes that is made by the promisee to comply with the acts or omissions that are required by the promisor.
In (Chwee Kin Keong and others v Digilandmall.com Pte Ltd , 2004), it was held by the court that it is necessary that to be a valid consideration the same must be absolute in nature and not sufficient. A consideration must have some value in law and that need not be sufficient in nature.
Thus, these elements together results in the formation of a valid contract.
Apart from the law of contract, one of the laws that is normally applicable on parties is the law of negligence.
In (Donoghue v Stevenson, 1932)the law of negligence submits that every defendant is liable for the loss that is caused to the plaintiff because of his acts or omission. The main requirements to prove negligence are:
At times, the parties to the contract try to limit their liability by relying on the exclusion clause. The exclusion clause limits the liability of the party to the contract on the happening of some pre decided event which is made part of the contract mutually by the parties.
If any party wants to incorporate an exclusion clause independently then reasonable efforts must be made to bring the clause in the notice of other party.
Now advice is considered to Tommy
When both Tommy and Johnson were friends
It is submitted that Tommy was a magician who was engaged by SIN and he has to perform at the SIN open House. Johnson was the majority shareholder and director of SIN.
5 years age both of them were full time lecturers in the same university and thus known each other for about three years. Thus, there is a cordial relationship amid them. Tommy is willing to help Johnson in SIN Open House considering that they were friends for such a long time.
Thus, both Tommy and Johnson are in friendly relationship and thus considering (Balfour v Balfour , 1919) there is no legal intention amid both of them resulting in no contract formation.
However, a contract was established amid them. It is submitted that Tommy is willing to help Johnson but the main aim of entering into the contract was not their age old friendship. Thus, it is submitted that though they are in amicable relationship but their intention was to make a valid enforceable contract.
When Tommy’s fees of $1,000 as compared to Terry the Juggler’s fees of $2,000
It is submitted that a valid contract was made amid Johnson and Tommy but Tommy was provided with fees of $1,000 whereas Terry was provided with a fees of $ 2,000. Now, $1000 that is provided to Johnson to Tommy was against the services that is provided by Tommy to Johnson. Thus, $1000 is exchanged amid the parties in order to hold their promises. Thus, it is a consideration in law.
There is no requirement that the consideration must be sufficient. The only requirement is that it must have some relevance in law. Thus, $1000 is sufficient consideration and is valid in nature.
Under the law of negligence, SIN has a duty of care against all his invites to make sure that no loss is caused to them because of his acts. Now, it is assumed that SIN is responsible for the acts of the student volunteers. Thus, he must make sure that no volunteer must act in such a manner so that loss is caused to any person. Tommy was rehearsing and thus is in proximate relationship. So, no loss must be caused to Tommy.
But, this duty is violated as the props were damages when the student moved the same. The level of care while handling the prop was not done adequately resulting in breach.
Because of breach the props of Timmy were damaged.
Thus, SIN must be held liable for the loss that is incurred to Tommy.
If the contract amid Johnson and Tommy contains a clause which makes SIN not liable for any loss or damage that is caused to the property howsoever caused during the rehearsals or actual open house, then, such clause is an exclusion clause.
Since the exclusion clause is made part of the contract unilaterally by SIN then he must make sure that the clause must be bring to the knowledge of Tommy by reasonable efforts. Since no reasonable efforts are made, thus, the clause has no validity.
Advice, S. (2012, August 14). Requisite elements in the formation of a contract: . Retrieved May 18, 2018, from Singapore Legal Advice: https://singaporelegaladvice.com/law-articles/requisite-elements-in-the-formation-of-a-contract/
Balfour v Balfour (1919).
Chwee Kin Keong and others v Digilandmall.com Pte Ltd (2004).
Donoghue v Stevenson (1932).
Goh, L. T. (2014). Contract Law. SAL Ann Rev .
Midlink Development Pte Ltd v The Stansfield Group Pte Ltd (2004).
T2 Networks Pte Ltd v Nasioncom Sdn Bhd (2008).
Woo Kah Wai v Chew Ai Hua Sandra (2014).
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